Aug. 29 (Bloomberg) -- Takeda Pharmaceutical Co. and Eli
Lilly & Co. lost a bid to have a judge throw out a combined $9
billion punitive-damage award over claims the drugmakers hid the
cancer risks of their Actos diabetes medicine.

Jurors properly considered evidence showing officials of
Osaka, Japan-based Takeda and Indianapolis-based Lilly knew
Actos was linked to bladder cancer and failed to properly warn
patients and doctors before assessing the damages, U.S. District
Judge Rebecca Doherty in Lafayette, Louisiana, ruled yesterday.

The verdict, which is likely to be reduced on appeal, is
the second-largest in the U.S. in 2014 according to data
compiled by Bloomberg.

“The jury acted within its role and discretion to attach
whatever weight and make whatever reasonable inference it deemed
appropriate when assessing the defendants’ conduct,” Doherty
said in her 101-page decision.

The decision didn’t resolve a defense request for a new
trial in Terrence Allen’s case, which was the first federal
trial over claims that Actos causes bladder cancer.

Both Takeda and Lilly disagreed with the ruling.

“We disagree with the ruling and await a ruling on our
motion for a new trial,” Kenneth Greisman, a spokesman for
Osaka, Japan-based Takeda, said in an e-mailed statement. “We
continue to believe that binding legal precedent requires the
judge to disregard the verdict in its entirety and grant a new
trial.”

“Lilly respectfully disagrees with the verdict and we
intend to vigorously pursue all post-verdict options, including
an appeal,” Candace Johnson, a Lilly spokeswoman, said in a e-mailed statement. “ We believe the evidence did not support
claims that Actos caused his bladder cancer.”

Generic Competition

Actos sales peaked in the year ended March 2011 at $4.5
billion and accounted for 27 percent of Takeda’s revenue at the
time, according to data compiled by Bloomberg. Actos has
generated more than $16 billion in sales since its 1999 release,
according to court filings. Takeda now faces generic competition
from Ranbaxy Laboratories Ltd.

Lilly served as Takeda’s U.S. partner in selling and
marketing the drug over seven years starting in 1999. While that
partnership ended in 2006, Lilly retained rights to sell Actos
in parts of Asia and Europe, as well as in Canada and Mexico.

Allen, a former hardware-store manager from Attica, New
York, alleged that he developed bladder cancer after taking
Actos for more than five years starting in 2006.

He argued that Takeda executives ignored or downplayed
concerns about the drug’s cancer-causing potential and misled
regulators about its risks to protect billions in sales.

‘Reckless Disregard’

Jurors deliberated for little more than an hour March 8
before finding that Takeda and Lilly acted with “wanton and
reckless disregard” in marketing Actos and that the drugmakers
should pay a combined $9 billion in punitive damages. It was the
sixth-largest punitive award in U.S. history, according to data
compiled by Bloomberg.

The jury had earlier awarded $1.5 million in compensatory
damages to Allen.

The panel ordered Takeda to pay $6 billion in punitives
while saying Lilly was responsible for the other $3 billion.
Because of indemnity agreements between the two drugmakers,
Takeda may wind up paying the full award.

The $9 billion award, the sixth-largest punitive verdict in
U.S. history according to data compiled by Bloomberg, will
probably be cut because the U.S. Supreme Court has said such
bad-conduct awards must be proportional to compensatory damage
verdicts that underlie them.

A majority of the court has said that in limited cases,
punitive awards that amount to no more than 10 times a
compensatory award may be acceptable.

Takeda officials said today that a completed Actos study
was sent to global health regulators, including the U.S. Food
and Drug Administration. The 10-year study found no significant
risk of bladder cancer in Actos patients or link between the
duration of the drug’s use and the disease, company executives
said in an e-mailed statement. The study was conducted by the
University of Pennsylvania and Division of Research at Kaiser
Permanente Northern California.

Takeda rose 0.3 percent to 4,733 yen in Tokyo trading as of
9:46 a.m. today. The stock dropped 5.2 percent to 4,572 yen on
April 8 after the two companies were ordered to pay a combined
$9 billion in punitive damages.

The case is Allen v. Takeda Pharmaceuticals North America
Inc., 12-cv-00064, U.S. District Court, Western District of
Louisiana (Lafayette).